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    Closing Agreements

    Under Pennsylvania law (Act 123 of 2024), a closing agreement is a tool the Department of Revenue may use when a taxpayer owes Pennsylvania taxes. The department has legal authority to enter into a written closing agreement with a taxpayer to settle a tax issue and outline how the taxpayer will stay compliant with Pennsylvania taxes moving forward. 

    Closing agreements are designed to resolve situations that cannot be easily addressed through other tax resolution options. They also are established to help set the taxpayer on a path to avoid a similar issue in the future. 

    Overview

    The department will only enter into closing agreements in limited situations. They only apply to: 

    • Personal Income Tax 
    • Sales and Use Tax 
    • Corporate Net Income Tax 

    Before requesting a closing agreement, be sure to review all of the other possible options to resolve state taxes that are owed after your due date has passed. In many cases, an appeal, compromise request, or payment plan may be more appropriate.

    Tax Resolution Options

    Important: Taxpayers who are requesting a closing agreement should always file a timely appeal if they disagree with an assessment. This protects a taxpayer’s due process rights while the case is being reviewed. 

    When Should I Consider a Closing Agreement?

    A closing agreement may be a good option when: 

    • Other tax resolution options have already been considered. 
    • The taxpayer agrees to comply moving forward, if applicable. 

    A closing agreement will NOT be considered when: 

    • The issue is under audit or investigation; 
    • The taxpayer has missing or non-filed returns;
    • The issue has been addressed through another resolution program; 
    • The taxpayer is unwilling to comply with rules or requirements moving forward, if applicable; or 
    • The request is anonymous or missing crucial information. 

    Anonymous requests for a closing agreement will not be considered. To ensure a fair and thorough review, the department requires sufficient identifying information to evaluate the facts and circumstances of each case. 

    What Happens Once I Submit a Request for a Closing Agreement? 

    1. Initial Review

    The department will review your request to determine if the issue may qualify for a closing agreement or if another option may be more appropriate. 

    2. Case Number and Instructions

    If your request moves forward, you will receive an email containing your case number, a request for a Power of Attorney, if you have a representative, and instructions for next steps. 

    3. Formal Application

    You will be asked to submit a formal application. After these documents are received, your case will be reviewed in detail. The department will notify you if your request does not move forward. 

    4. Review

    The department will conduct a thorough review and determine whether a closing agreement is appropriate.

    5. Final Agreement

    If approved, the department will issue an agreement for you to sign. Once you return the signed agreement, the department will finalize it and provide instructions for payment. The final agreement is a binding resolution, meaning it can only be reopened in situations where fraud or malfeasance occurred or there was a misrepresentation of the facts.

    Requesting a Closing Agreement

    For the Closing Agreement Office to determine if your situation would be a good candidate for a Closing Agreement, please fill out the following survey.

    Request a Closing Agreement